invest in bulgaria - your gateway to eu_14.12
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InvestBulgaria AgencyInvestBulgaria Agencywww.investbg.government.bgwww.investbg.government.bg
BulgariaBulgaria your gateway to EUyour gateway to EU
Bulgaria-Korea business forum,
14. December 2010, Sofia
Dimitar NikolovDimitar Nikolov
Marketing DirectorMarketing Director
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Strategic location Why Bulgaria
Macroeconomic Indicators
FDI Inflow
Korean Investments in Bulgaria
Highly Skilled Labor Force Comparison between Bulgaria and
Europe
Business Sectors of Highest
Potential for Investors
Investment Promotion Act
Investment Incentives in Bulgaria
InvestBulgaria Agency
Structure of the Presentation
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Pan-European Transport Corridors
9
4
7
10
8
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Bulgaria strategically located as a bridge
between Europe and Asia
Strategic geographic location Major transport corridors passing
through Bulgaria
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EU membership and NATO membership
Currency board
EUs most favourable taxes:
10% corporate income tax rate
0% in high-unemployment areas
10% flat tax rate on personal income
Europes most competitive operational costs
Well-educated and highly-skilled labour force
45,000 Bulgarian students in Europe Government financial support for priority investment
projects
Linking Europe and Asia
Excellent climate, natural scenery, food and hospitality
Why Bulgaria
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4,5 5,0
6,6 6,2 6,3 6,2
-4,9
6.0
2002 2003 2004 2005 2006 2007 2008
4,0
6,5 6,5
12,5
7,8
3,9*
0,6
2004 2005 2006 2007 2008 2009 2010
12,210,7
9,1
6,9 6,3
9,1 9
2004 2005 2006 2007 2008 2009 2010
Greenfield+Expansion
866 1 103 903 9801 851
2 7363 152
6 222
9 052
3 282*
6 686*
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
GDP Growth, %
2009
Inflation, %
Unemployment, % FDI inflow, EUR Mio.
Bulgaria at a glance
Source: Bulgarian National Bank
* October 2010
* Preliminary Data* October 2010 * Preliminary Data* October 2010
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Greece 115%
Euro area 79%
Hungary 78%
Germany 73%
UK 68%
Czech Republic 35%
Romania 24%
Bulgaria 15%
Estonia 7%
Bulgarian government debt is 3rd lowest in Europe Budget surplus / deficit has consistently
outperformed regional and European averages
-8%
-7%
-6%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
2005 2006 2007 2008 2009
Bulgaria
Euro Area
CEE average
Source: Eurostat
Remarkable government financial indicators on
regional and even on a pan-European scale
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Agency Date
Foreign currency Local currency
Long-
term
Short-
termOutlook
Long-
term
Short-
termOutlook
Japan CreditRating Agency
22 Oct
2010
BBB - Stable BBB+ - Stable
Fitch 30 April
2009BBB- F3 Negative BBB - Stable
Standard&
Poors 1 Dec2009BBB A-3 Stable BBB A-3 Stable
Moodys 31
August
2010
Baa3 - Positive Baa3 - Positive
Source: Ministry of Finance
Credit rating
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Source: BNB, IBA
Record FDI inflow in 2006 2008, EUR m
* Preliminary Data
Greenfield+Expansion
866 1 103 903 980
1 851
2 7363 152
6 222
9 052
3 282*
6 686
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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Decreasing FDI inflow in 2009-not a
Bulgarian phenomenon
Source: UNCTAD
SEE level Global level
45
55
63
41
54
52
Serbia
Bulgaria
Romania
Russia
Czech
Ukraine
FDI decrease.%
19
3
50
36
53
57USA
Japan
France
Brazil
China
India
FDI decrease,%
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5,36,6
5,8
3,0
5,0
3,0 2,5 2,5
1,0
4,84,1 3,8
2,3 2,2 2,0 1,8 1,3
19,6
3,0
9,5
1,2-1,7
BULGARIA SERBIA ROMANIA UKRAINE POLAND CZECH
REP
HUNGARY SLOVAKIA TURKEY LATVIA SLOVENIA
2008 2009
FDI to GDP, %, 2008 2009
Source: BNB, Bank Austria Creditanstalt
Bulgaria leads CEE countries in terms of
FDI to GDP indicator
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Source: BNB, IBA
Austria the Netherlands Greece Un. Kingdom Germany
16%5903.8
12%4642.7
9%3419.7
8%3036.7
7%2526.3
Cyprus USA Hungary Italy Russia
5%
1921.1
3%
1310.2
3%
1276.4
3%
1170.0
3%
1088.1
FDI stock by country,1996 2009, %, EUR m
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2390.7
1728.6
2172.0
2480.9
6319.0
6762.5
8252.7
7272.6
Other
Telecom
Electricity, gas and water
Construction
Trade
Manufacturing
Finance
Real estate
Source: BNB, IBA
22%22%
19%19%
18%18%
17%17%
7%7%
6%6%
5%5%
6%6%
FDI stock by sector, 1996 2009, %, EUR m
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Korean Investments (1996 Q3 2010) - 34.3 EUR Million;
according to the FDI Stock by countries Korea is ranked
52th
The biggest Investments in Electrical Engeneering,
Renewable Energy, Trade
Bilateral Treaty on encouragement and reciprocal
protection of investments between Bulgaria and Korea
Convention for the avoidance of double taxation
between the two countries
Korean investments in Bulgaria
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Trade between Bulgaria and Korea
(BGN m)
Source: NSI
5364
31
148 144
80
169*
84*
2007 2008 2009 2010
Export to Korea Import from Korea
* October 2010
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Hyundai Heavy Industries Co.
1997 Hyundai Heavy Industries Korea privatized Bulgarian well-
known manufacturer of Power Transformers and Tap Changers
Elprom Trafo
Manufacturer of electrical components: power transformers, tap
changers, equipment for photovoltaic power stations
80% export of the production, mainly to Russia, Romania, USA
etc.
About 650 employees
2009 the company won a project granted by European Funds for
improvement of competitiveness of large enterprises
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Almost 60,000 students graduate every year from
over 50 universities
Bulgaria has one of the highest proportions of
students abroad from all European countries
860
833
Other 12,684
Agriculture
Architecture
Law 1,553
Health 3,166
Education 3,677
Engineering 7,178
Social sciences 8,372
Business 19,480
Czech Republic 2.1%
Romania 2.2%
EU-27 average 2.8%
Germany 3.1%
Austria 4.7%
Greece 5.8%
Bulgaria 8.3%
Slovakia 10.2%
Ireland 14.2%
Iceland 17.8%
Educated and skilled workforce one of the
key advantages of Bulgaria
Source: NSI
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25022
2862
12005
8253
23764
132869
12992
681
493
4175
10124
39594
14288
262
528
4901
10307
61262
Russian
Italian
Spanish
French
German
English
Sofia
Plovdiv
Varna
Source: NationalStatistics Institute
Language education in upper secondary
general schools by city, 2008/2009
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10%
16%
19% 19% 19% 20%
Bulgaria Rom ania Hungary Slovakia Czech
Republic
Turkey
Source: IBA
* 0% for manufacturing companies in areas with high unemployment
Comparison between Bulgaria and Europe
Corporate income tax rate, 2010
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Source: CEIC, Eurostat
Comparison between Bulgaria and Europe
Average monthly wages, Q2 2010, EUR
1099
730705
327456
Bulgaria Romania Slovakia Hungary Czech
Republic
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Attractive sectorsAttractive sectors Major investors supported byMajor investors supported byInvestBulgaria AgencyInvestBulgaria Agency
Electrical engineering
Mechanical engineering
Electronics
Automotive parts manufacturing
Chemical Industry
Solvay (Belgium)
Aurubis (Germany)
Liebherr (Germany)
Lufthansa Technik (Germany)
Montupet (France)
Italcementi (Italy)
Sise Cam (Turkey)
Stomana Industry (Greece) Miroglio (Italy)
Knauf (Austria)
Ixetic (Germany)
Schneider Electric (France)
Competitive advantagesCompetitive advantages
Export oriented sectors
The lowest operational cost in EU
Highly skilled labour force
7% with engineering degree
EUR 336 total average monthly
compensation (Q4 2009)
Manufacturing
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Focus on innovations
OpportunitiesOpportunities Competitive advantagesCompetitive advantages
Electronic devices and technologies
Electrical engines, incl.
electromobiles
Waste treatment facilities
LED lights
Highly-skilled workforce available
Strong traditions in IT
development and in pharmacy
Europe's most competitive wages
Harmonized legislation with EUs
High productivity rate and strong
GVA growth
Export oriented sectors
Government measuresGovernment measures
Increasing of R&D expenses from
0,5 to 2% from GDP until 2020
Adopting an Innovation Act (inprocess)
Establishing venture capital funds
(EU Program JEREMIE - 200 Mio.)
Stimuli for R&D investment in the
Investment Promotion Act
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OpportunitiesOpportunities Major projects supported byMajor projects supported byInvestBulgaria AgencyInvestBulgaria Agency
Wind parks
Solar plants
New nuclear PP
Modernization and construction of
new TPPs
Biomass and Biofuel
11 wind park projects
3 solar park projects
3 projects for modernization and
construction of new TPPs
2 Biomass projects
3 Biofuel projects
Competitive advantagesCompetitive advantages
Skilled labour force
Availability of natural resources
Favorable climate conditions
Harmonized legislation with the EUs
RES electricity production to
double (from 10% to 20%) by 2020
Administrative and economic
incentives for RES energy
production
Energy Sector
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ICT & BPO
OpportunitiesOpportunities Main Players in BulgariaMain Players in Bulgaria
Software development
IT support centers
F/A shared service centers
Contact centers
IT
Software AG (Germany)
Microsoft (USA)
Hewlett Packard (USA)
IBM (USA) Nemetschek (Germany)
Johnson Controls (USA)
SAP Labs Bulgaria (Germany)
CISCO (USA)
BPO 60K (UK)
Sutherland (USA)
IBM (USA)
OPI Global (USA)
Hewlett Packard (USA)
C3i (USA)
Competitive advantagesCompetitive advantages
Skills availability
Strong traditions in IT development
Reliable telecom infrastructure
Europe's most competitive wages
Reasonable office prices
11-12% ICT share of the GDP for
2009
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Investment Promotion Act
Promotion for initial investment in the followingsectors:
From industrial sector:
Manufacturing
From the sector of services:
Computer programming, consultancy & information
services activities
Scientific R & D and activities of head offices
Education
Human health care activities
Warehousing and support activities for
transportation
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Investment classifications under the
investment promotion act, ( Million)
Region or Sector Class B Class A
General5 - 10 >10
In municipalities with unemployment rate
equal or more than the country average 2 3.5 >3.5
In high-tech activities in the manufacturingindustry for the whole country
2 3.5 >3.5
In high-tech activities in the services,
computer technologies and R&D sectors
for the whole country
1 2 >2
Investment classes A and B depending on the value, region andsector allocation of the investment
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All classes (A&B) Information services and shortened administrative
services
Preferential treatment upon acquisition of a right of
ownership and limited real rights over real estate privatestate or private municipal property
Financial support for vocational training of employees for
the needs of the investment project
A class
Individual administrative services
Infrastructure support to the borders of the investment
project site
Incentives under the Investment Promotion
Act
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All sectors of the economy, with
the exception of the restrictions
imposed by EU Regulation 800/2008
Council of Ministers approval
Conditions priority status
depending on the value, jobs created
and region allocation of the investment
Priority Investment Projects
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Criteria for classification of the priority
investment projects
Region or Sector of the investmentRegion or Sector of the investment
InvestmentInvestment
valuevalue
(Euro m)(Euro m)
JobsJobs
General 50 200
In industrial zone construction and its development
into industrial park35 100
In municipalities with unemployment rate equal or
more than the country average25 100
In high-tech activities in the manufacturing
industry for the whole country 25 100
In construction of a technological park15 50
In education, human healthcare, IT and R&D
activities, professional activities, culture 10 50
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Priority investment projects incentives
All the incentives for class A and B
Special Incentives for priority investment projects:
Institutional support
Financial grants up to 50% for R&D and high-tech
services and up to 10% for manufacturing projects
State tax exemption for changing the land zoning
Possibility for acquisition of real estate private state or private municipal
property without a tender and at a price, not lower than the tax assessment
of the property
Possibility for public-private partnership with municipalities, universities and
public companies
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10% corporate income tax;
0% for manufacturing companies in areas with high
unemployment
10% personal income tax, flat rate
Opportunity for R&D expenditure write-off
Depreciation of 2 years for computers and new manufacturing
equipment
2-year VAT exemption for imports of equipment for investment
projects over 5 million, creating at least 50 jobs
5% withholding tax on dividends and liquidation quotas (0% for EUtax residents)
Up to 1 year minimum salary and reimbursement of social/health
care security for employing young people and disadvantaged
people through the Employment Agency
Investment incentives in Bulgaria
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InvestBulgaria Agency is a Government investment promotion arm,part of the Ministry of Economy, Energy and Tourism.
IBA services:
Macroeconomic data on Bulgaria
Legal advice
Data on operational costs
Regional information: industrial zones and infrastructure, data on
unemployment, skilled labour force and level of education
Recommendation of investment project sites
Identification of potential suppliers, contract manufacturers and
joint-venture partners
Personalized administrative servicing
Liaison with central and local governments
Liaison with branch chambers and NGOs
InvestBulgaria Agency
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InvestBulgaria Agency
Sofia 1000, 31 Aksakov Str.
Phone: (+359 2) 985 5500Fax: (+359 2) 980 1320
E-mail: [email protected]
Web: www.investbg.government.bg